Warehousing is the second major component of physical distribution. When talking about warehouse inventory software, it is necessary to understand warehousing management. It has two distinct and equally important parts. First, there is the physical job of creating and running the network of storage points. Second, there is the managerial task of controlling the inventory levels. Though interrelated, they require separate and detailed discussion.

Like transportation, warehousing vests the products with time and place utility. In the case of some commodities, they also form utilities as well. It is common knowledge that a certain level of storage of products is an inescapable part of marketing. And, for products with a high degree of seasonality, larger scale storage is a must. In some cases, sub distribution or transit bottlenecks and increased lead-time of delivery necessitate extra storage.

Usually a product flows from the factory to the consumer through a long winding chain, consisting of multiple tiers of warehouses. In designing a warehousing system, it is necessary to raise and answer the following basic questions relating to this flow:

How many warehouses should we have?

Where should we locate them?

What should be the size or capacity of each of them?

While developing warehouse inventory software, the firm should remember that once the warehousing system is designed and put into operation, it becomes a partly fixed and partly adjustable entity. This is so because with most products, the demand in a given marketing territory consists of an average/constant component and a transient component. As a result, warehousing will have a constant component and a variable component. This automatically means that some adjustment is feasible in warehousing depending on market behavior. Generally speaking, the fewer the number of warehouses in the marketing territory, the lower the cost of warehouse inventory software.